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FRONTLINES

Ask Bill

Q. Bill, everybody seems to be talking about the future of the legal profession, on blogs, in articles and online discussion groups, even at lawyer luncheons. Why now? Why the sense of urgency?

A. It certainly does seem like there’s a lot more talk about the future of the legal profession recently. Richard Susskind’s provocatively titled book The End of Lawyers? (Oxford University Press, 2009) may have popularized the discussion. But law firm management, academics and consultants have otherwise been pondering the future for some time. These days, though, the evidence shows that the times “are a changing” like never before.

Of course, since no one can really measure the future, the evidence tends to measure current trends that help evaluate how things are changing and how fast they are changing in order to make informed judgments about what things will look like in a year or 10 years from now.

The subject is so hot that a recent two-day seminar put on by Georgetown University Law School’s Center for the Study of the Legal Profession drew a big crowd to consider such topics as “Creative Destruction and Innovation,” “Business Models in Legal Practice,” “Theory and Evidence on the Evolving Relationships in the Corporate Legal Market,” “Rethinking Legal Education” and “What Is Our Legacy to the Next Generation of Lawyers?” The seminar materials are posted online at www.law.georgetown.edu/legalprofession/conferencepapers.htm .

I’ve had the opportunity to read some of those materials and was particularly impressed with a paper by Bryan Hughes, chief executive of the international law firm Eversheds LLP. His paper is titled “The Law Firm of the 21st Century: The Clients’ Revolution” and focuses on the fact that, even before the recent recession, “[b]usiness people were disillusioned with ever increasing fees, wasteful practices and an unwillingness (on the part of law firms) to change. The recent recession, he writes, has only polarized these issues.

At the Center of the Legal Solar System
So what are the factors propelling changes now? According to an Eversheds survey of corporate general counsel and law firm managing partners, two factors lead the list: 37 percent of respondents cited “globalization” and 35 percent cited the “increasing professionalism and status of general counsel.” The globalization of the legal profession, Hughes writes, was already underway before the recession. However, it was accelerated as cost pressures forced general counsel to shift work from West to East to take advantage of low-cost labor.

Survey respondents also pointed to a need on the part of law firms to “develop a sophisticated international footprint.” Not surprisingly, going hand in hand with this is a greater use of and investment in technology. In fact, 58 percent of the survey respondents said their firms had used technology to deliver legal services more efficiently as a result of the recession.

Hughes describes what’s going on in the legal profession as the perfect storm—a revolution in which the client “has in effect moved to the centre of the legal solar system, whilst the premium law firms have been relegated to an orbiting position.” Among the multiple results of this revolution, he cites the following as part of the aftermath:

  • The balance of power shifts over to clients and the legal sector enters the modern world.
  • Fee levels for legal services will decline or stay the same over the long term.
  • General counsel have increased status and an expanded role in business.
  • Delivery of legal services will be geared up to value and efficiency.

Some of the more tangible consequences include:

  • Recession-driven efficiency in law firms
  • Unbundling of legal services
  • Strategic resourcing through outsourcing and use of technology
  • A radical shift to value billing
  • General counsel taking more work in-house at the expense of law firms

What all this means for law firms, according to Hughes, is nothing less than a complete realignment. The fallout from large law firms having “less premium work” will have profound effects on how firms are structured, how large they grow and how lawyers belong to and relate to law firms. “Many managing partners,” he writes, “have recognised that they are becoming primarily service providers and that their previously dominant role has irrevocably altered.”

The fact is that clients are “increasingly indifferent to the type of organization in which their external lawyers work,” according to Hughes. In fact, in the Eversheds survey, 68 percent of general counsel did not care where their outside lawyers worked. Only 30 percent of partners surveyed “were wedded to the partnership model,” down from 57 percent in 2008.

The Difference a Decade Can Make
What is most striking to me about the trends that Bryan Hughes describes is that they all started with demands from the client side of the equation—not from within law firms or the legal profession. The reason for that seems apparent when looking back on the last decade or two.

As Hughes explains it, “Previously, law firms providing premium services grew big and profitable under market conditions which allowed a boom in the financial services sector.” Law firms then were in the “unusual circumstance” of being “allowed to dictate the terms and prices of delivering their services.” This resulted, in his words, in “a time of exponential growth for the big international law firms in terms of headcount, revenues and profitability.”

And now here we are in 2010, facing the aftermath. As difficult as it is to predict the future, when we see trends described as being “revolutionary,” we tend to sit up and take notice. This will all certainly have implications far beyond the large law firms, but what those implications are remains to be seen.

About the Author

K. William Gibson is a personal injury lawyer and arbitrator in Clackamas, OR. He is the author of How to Build and Manage a Personal Injury Practice, 2nd Edition (ABA, 2006), and the editor of Flying Solo: A Survival Guide for the Solo and Small Firm Lawyer, 4th Edition (ABA, 2005).

For more on this topic, read Law Practice magazine’s January/February 2010 issue focused on “The Future of Law Practice,” at www.lawpractice.org/magazine/articles/v36is1_toc.shtml .

Have questions about your career, your practice, your computer or anything else? Send them to Bill Gibson at kwg@gibsonmediation.com . Read past Ask Bill columns in the Law Practice archives at www.lawpractice.org/magazine .

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